What utilities should know about electric cars

Utilities know by now that they need to adopt steps to manage the supply and demand of electricity if electric cars eventually become popular. The trick is to figure out what types of new equipment and customer incentives will be needed, and over what time frame. That’s a particularly difficult task for an industry that is conservative when it comes to investing in new technologies and is highly regulated.

To shed some light on this problem, the Electric Power Research Institute (EPRI) released a report on Tuesday that pinpoints the likely impact that electric vehicles will have on the electric grid and what steps utilities can take to deal with the impact. The report looks at the affect of plug-in electric cars, whether they are the all-electric variety such as the Nissan Leaf or the hybrid version like the Chevy Volt. And speaking of the Volt, GM plans to launch what it’s calling the first real-world pilot of smart-grid solutions for electric vehicles this year.

Here are some key findings from the EPRI report:

1. How many electric vehicles will be on the roads, in what time frame? The electric car market has barely started, and key technology, including next-gen batteries, that can deliver the wide adoption of electric vehicles have yet to be developed. EPRI came up with three forecasts for the cumulative number of electric cars that will show up between 2010 and 2030. The low estimates are 3.1 million by 2020 and 15 million by 2030, based on historical sales from 2000 to 2008. The medium estimates are 5.8 million by 2020 and 35 million by 2030, based on historical sales and carmakers’ announcements of new models and production volumes. The high side will be 12 million by 2020 and over 65 million by 2030. And, yes, that’s a large range for an estimate.

2. Electric vehicles’ share of the car market. The low estimates put electric cars at 1 percent of the total cars driven in the U.S. by 2010 and 4 percent by 2030. The medium estimates peg the market penetration at 1.9 percent in 2020 and 9.4 percent in 2030. In the most optimistic scenario, electric cars will make up 3.9 percent in 2020 and roughly 17.7 percent in 2030.

3. How cheap is the fuel for electric cars? Electric cars can be fueled up at one-third or a quarter of the cost of a gasoline car, given the current pricing of both fuel types. Utilities are worried that because electricity is cheaper to start with, drivers might juice up their cars even in peak hours, when electric rates are high (but not as high as comparable gasoline costs). But providing and educating drivers about the low rates they could get in off-peak hours will help to minimize the need to increase electricity supply during peak hours and alleviate any stress to the grid.

4. Charging at home is ideal. Although residential charging equipment will typically require 1.4 kW to 7.7 kW of power, peak electricity demand from electric cars will be far lower, at 700 watts. That’s because there is enough time from early evening to the next morning to accommodate charging. By providing incentives, such as low electric rates, utilities can nudge car owners to start charging after 9 p.m., when overall demand for electricity is much lower than earlier in the evening. The hours between 11 p.m. and 3 a.m. are most ideal and cause the least impact to the grid. But the report cautions that if most people program their cars to start charging, say, right after 9 p.m., then the utilities will have to deal with a big spike in demand.

5. Equipment cost. A residential charging unit typically costs roughly $1,500 to install. Charging-station costs vary from $2,500 to $6,000, depending on the features of the equipment. Prices should fall as more equipment is installed.

6. Potential rate plans. To entice consumers to charge late at night, utilities could try several offers that are similar to cell phone plans. They can charge a fixed rate for an “anytime plan,” a discount rate between certain hours overnight or a flat monthly fee for charging overnight. The last option could provide consumers with the most savings.

7. Utilities with the most initiatives. Five utilities already have done a lot of homework in figuring out current and potential future charging infrastructure costs in their service territories: Southern California Edison, Detroit Edison, Progress Energy, Georgia Power and Sacramento Municipal Utilities District.

8. Who will own the charging stations? Who will own and provide charging services outside the home will be a more complex question than in the case of gasoline stations. And the costs of these services to consumers can range from free to rates that provide a good profit for the equipment owners. Here are five major ownership types: government, utility, employers, retailers and strictly for-profit charging stations. Some of them might offer electricity at a discount to attract customers.